Incentive Policy for Battery Energy Storage Systems Based on Economic Evaluation Considering Flexibility and Reliability Benefits

Abstract

The efficient application of battery energy storage system (BESS) technology can effectively alleviate the uncertainty and volatility caused by distributed generations (DGs) and loads, and reduce their adverse effects on the power grid. More efficient applications could delay equipment capacity upgrades, improve equipment utilization, save costs, and increase the system hosting capacity for renewable energy. However, the application of BESS is restricted by its high cost and limited policy support. It is, therefore, necessary to carry out an economic evaluation of BESS, considering its flexibility and improvement of reliability, alongside incentive policy research to promote its deployment. This study on BESS involves four key aspects: 1) It proposes a reliability-benefit model for BESS, considering the value of electricity in the national economy. 2) It describes a flexibility improvement benefit calculation model for BESS, built with the definition of flexibility indexes of distribution network related to BESS, and considering the capacity, charge, and discharge constraints. 3) A reliability improvement benefit calculation model of BESS was built, and the present study proposes a detailed calculation flow of economic evaluation model for BESS users considering net present value (NPV) index and dynamic payback period (DPP) index. 4) An impact analysis of different prices and incentive policies on BESS business models is also carried out, with the present study finally presenting an incentive policy based on flexibility and reliability improvement. The results of the IEEE 33-node test system show that flexibility and reliability improvement can effectively reflect the benefit and cost of BESS, and that incentive policies can help to promote the development of BESS technology.